Before materially relying on sales from a commercial database, what approach best addresses data reliability?
Correct Answer
D) Assess the source and corroborate material facts as needed
Assess the database’s definitions, coverage, currency and verification procedures, and corroborate material relied-on transaction facts using appropriate independent evidence. Spot checks can help evaluate source quality but are not automatically sufficient for every relied-on sale or assignment. A vendor verification flag or commercial subscription does not alone establish reliability. Report actual source and verification work accurately.
Why This Is the Correct Answer
Option D is correct because assessing the source and corroborating material facts as needed is how an appraiser meets the duty to collect, verify and analyze the information necessary for credible results. Evaluating the database's coverage, currency and verification methods shows how much reliance is reasonable. Material relied-on facts should be corroborated, and the actual data and verification sources should be reported accurately.
Why the Other Options Are Wrong
Option A: Treat the database’s brand reputation as sufficient verification
Option A treats the database's brand reputation as sufficient verification. A good reputation may say something about general quality, but it does not verify the specific transaction facts relied on in this assignment.
Option B: Accept each record as authoritative, because access is paid for
Option B accepts each record as authoritative because access is paid for. Paying for a subscription does not make individual records accurate, and the appraiser remains responsible for verification.
Option C: Rely on a vendor’s verified flag to settle material facts
Option C relies on a vendor's verified flag to settle material facts. A vendor flag does not alone establish reliability; the appraiser should understand what the flag means and corroborate material facts as needed.
Source checked, facts confirmed
Two steps: first judge the source, then confirm the facts you actually rely on. Paying for data buys access, not accuracy.
How to use: Use this when an answer choice suggests reputation, payment or a vendor label replaces verification.
Exam Tip
Answers that let a brand, a subscription or a vendor flag stand in for the appraiser's own verification are usually wrong. Look for the choice that evaluates the source and corroborates material facts.
Common Mistakes to Avoid
- -Treating a vendor's verified flag as proof of the sale facts
- -Assuming paid data does not need corroboration
- -Reporting a verification source that was not actually used
Concept Deep Dive
Analysis
This question tests the appraiser's responsibility to verify information before relying on it. A commercial database is a source to evaluate, not a substitute for verification. The best approach assesses the database's definitions, coverage, currency and verification procedures and corroborates material transaction facts with appropriate independent evidence.
Background Knowledge
USPAP requires an appraiser to collect, verify and analyze all information necessary for credible assignment results. Commercial databases vary in definitions, coverage, update timing and verification methods, so their reliability must be assessed. Lender guidelines such as Fannie Mae's also require the data and verification sources for each comparable to be reported.
Real-World Application
An appraiser pulls five sales from a commercial data service, one marked verified by the vendor. Because one sale's price looks high, the appraiser checks the recorded deed and speaks with the listing agent, learning that the price included seller-paid concessions. The appraiser reports both the data source and the verification source for each comparable.
More Statistics Questions
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Sale-price observations are $410,000, $420,000, $435,000, $450,000. Compute the median; order the observations first and average the two middle values if n is even. Report to the nearest dollar.
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